dividend seems secure. if not, go to step two. look at the cash flow, especially important when dealing with those companies that have a lot of machinery or other heavy capital investments, cable companies, which cause them to report high depreciation and amortization costs. high yielding telcos, verizon and at&t, as communications networks, they don't come cheaply. the depreciation and amortization costs don't come out of a company's actual cash but they do skew the earnings lower, which is why the cash flow can often give you a better idea about the health of the dividend. a lot of callers call say, listen, jim, why do you like at&t, doesn't cover the dividend? it's the cash flow, okay? finally you have to look at the balance sheet to make sure there isn't a lot of debt coming due in the near future that can often necessitate a dividend cut if the company doesn't have cash on hand. last but not least, you need to know how to collect, how to actually collect the dividend. forget all the jargon like declaration date, "x" date, the record date. no, on "mad money" we care about only one date with dividends. that's the must-own date. that's the last day you have to buy a stock in order to claim its next dividend payout.